Rio Tinto capex increases by a third, costs up $530m

Copyright © 2017 Rio Tinto

Rio Tinto has posted its half-year financial results for 2018, revealing a significant year-on-year (YoY) capital expenditure increase of 34 per cent to $US2.36 billion ($3.19 billion), while operating costs increased by $US392 million in the same period.

This YoY rise in costs is indicative of a wider industry trend towards inflation. The rise is also in keeping with Rio’s second quarter results released last month.

Underlying earnings before interest, taxes, depreciation and amortisation (EBITDA) stood at $12.4 billion and operating cash flow of $7 billion.

Rio Tinto invested around $US1.4 billion on projects like the AutoHaul driverless train system in the Pilbara, the Amrun bauxite project in Queensland and Oyu Tolgoi copper-gold project in Mongolia.

The company also has pre-tax divestment arrangements in place to the tune of $6.75 billion as it completed its move away from coal production in the first half of the year — $5.4 billion of this is expected to be returned to shareholders after tax.

In total, shareholders are expected to receive a record first-half dividend of $9.7 billion ($1.71 a share) when extra capital from ongoing operations is taken into account.

Rio Tinto chief executive Jean-Sébastien Jacques said the company had delivered a strong set of results in a favourable market environment.

“We continue to deliver superior shareholder returns with a record interim dividend of $US2.2 billion and a $US1 billion top-up to our existing share buy-back programme,” he said.

“In addition, in 2018 we have announced $US5 billion of divestments. The board has today approved that these disposal proceeds, net of tax, will be returned to our shareholders, with the precise timing and form to be determined.

“We will continue to invest in Tier 1 growth, further strengthen our portfolio and maintain a strong balance sheet in order to deliver superior returns to shareholders in the short, medium and long term.”

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